The Clean Wardrobe is a laundry service owned and operated by Mr. Martin Cleanwell. Mr.
Cleanwell rents a building and equipment, pending the expansion of his business to new
facilities. The actual work of dry cleaning for his laundry service is done by Dry Cleaners, Inc. at
wholesale rates. The assets and the liabilities of the business on October 1, 2022 are as follows:
Cash- $15,000; Accounts Receivable - $31,000; Supplies - $3,000; Land - $36,000; Accounts
Payable - $13,000. Business transactions during October are summarized as follows:
(a) Martin Cleanwell invested additional cash in the business with a deposit of $28,000 in
the business bank account.
(b) Paid $14,000 for the purchase of land as a future building site.
(c) Received cash from customers for dry cleaning service amounting to $17,000.
(d) Paid rent for the month, $5,000.
(e) Purchased supplies on account, $2,500.
(f) Paid creditors, $12,800.
(g) Sent an Invoice to customers for dry cleaning services already performed amounting to
$34,000. The customers are yet to pay for the invoice next month.
(h) Received monthly invoice for dry cleaning expense from Dry Cleaners, Inc. to be paid in
November amounting to $13,500.
(1) Paid the following during the month: wages expense - $7,500; delivery expense -
$2,500; utilities expense - $1,300; and miscellaneous expense - $2,700.
(1) Received $28,000 cash from customers who had previously availed of laundry services
but did not make immediate payments as payment for outstanding balances in their
accounts.
(k) Determined that the cost of supplies on hand at the end of the month was $1,900.
(1) Withdrew $8,000 from the business for personal use.
Required:
(1) Determine the amount or value of Mr. Cleanwell's capital as of October 1.
(2) Prepare the journal entries, ledger, and trial balance of the October transactions of The
Clean Wardrobe taking into account the previous accounting period's balances. (Note:
since dates are not provided, just indicate the letters for each transaction),
(3) Prepare the income statement, statement of change in equity and the balance sheet for
the period ending/as of October 31, 2022.
